OPTrust submits comments on planned regulations for pension transfer option for divested membersPosted: August 19, 2011
Toronto (August 19, 2011) - OPTrust has submitted comments to Ontario's Ministry of Finance regarding the intended content of new regulations under changes to Ontario's Pension Benefits Act (PBA). These changes may result in a new pension transfer option for some former OPSEU Pension Plan members who were affected by past public sector divestments.
The final regulations are needed before new provisions in Section 80.1 of the act can come into effect. These provisions will allow OPTrust and other public sector pension plans to establish special agreements providing new transfer options for employees who were enrolled in another pension plan as a result of past divestments. Under the new legislation, these agreements could provide eligible former OPTrust members with the option of consolidating their pension entitlements in their successor employer's pension plan.
The intended content of the regulations is described in a Ministry of Finance proposal published on July 25, 2011. This document outlines:
- the proposed terms under which pension plan administrators may establish transfer agreements
- which employees may be eligible to consolidate their pension benefits in their successor employer's pension plan under these agreements
- the information that must be provided to eligible employees so they can make an informed decision on whether to consolidate their pension benefits
- other regulatory requirements for administering these special transfer agreements.
OPTrust's comments identify a number of technical issues and offer recommendations that would improve the administration of any transfer agreements that are established under the proposed regulations. OPTrust has also recommended that pension plans and other stakeholders be given the opportunity to provide additional comments on the draft regulations once they are made available.
Since OPTrust's inception in 1995, a number of former Government of Ontario employees transferred employment to successor employers through a series of divestments. When affected OPTrust members were transferred, they joined their successor employer's pension plan and became contributing members of that plan. However, where these transfers were subject to Section 80 of the Pension Benefits Act, the employment of the transferred employees was deemed not to have terminated for pension purposes. As a result, these former OPTrust members received a special deferred pension entitlement in the OPSEU Pension Plan for their credited service prior to the transfer.
Under the recent amendments to the Pension Benefits Act, affected employees may have the option to consolidate their two separate pension entitlements in the successor employer's pension plan. However, before this can happen:
- the regulations governing such transfers required under Section 80.1 of the PBA must be finalized and proclaimed, and
- the affected pension plans must establish agreements setting out the terms of any such transfer option, in accordance with the regulations and the provisions of each plan.
The changes to the PBA do not provide an option for employees to consolidate their pension benefits in their previous pension plan.
If OPTrust establishes one or more pension transfer agreements with other pension plans under the Section 80.1, OPTrust will provide eligible former members with detailed information on their current pension entitlements, how consolidating their pension benefits would affect their pensions at retirement and other factors they should consider in making an informed decision about their transfer option.
Post-retirement insured benefits for eligible OPTrust pensioners
Some members have made inquiries about post-retirement insured benefits that are available to qualified retirees who receive an OPTrust pension.
Except for enrolment services provided under contract, OPTrust has no involvement in or responsibility for the sponsorship, funding or administration of employer-provided post-retirement insured benefits programs, including the requirements for eligibility. This responsibility remains with the Ontario Government.
If OPTrust establishes pension transfer agreements for divested employees with other plans, we will provide affected members with detailed information on their eligibility for post-retirement insured benefits coverage and how it would be affected by a decision to consolidate pension benefits in the successor employer's pension plan.
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